Wednesday, March 21, 2007

Google cost-per-action. Is this how mass media ends?

Google has put its much-awaited pay-per-action ad model live (in beta at least). Take a look at the details for yourself here.

So, what's the deal? Google says: "Pay-per-action advertising is a new pricing model that allows you to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher's site. You'll define an action, set up conversion tracking, and create ads that publishers in the Google content network can then choose to place in new ad units on their site."

It's only available within the US at the moment - and you have to apply to join in.
But the potential impact is huge. Scott Karp over at Publishing2.0 has an interesting take in his post Can Google Transform the Entire Web into a Direct Marketing Machine?

I agree with the risks Scott identifies for the web. But for publishers I think there's an even greater potential risk - the final nails in the coffin for mass media.

This closes a loop for advertisers. If I understand it correctly, it removes all risk on their side.

Now they can say "I'll only pay when I make a sale". They have to pay bigger than for a straightforward "I'll pay when you click my link" model. But it's a 100 per cent efficient model.

This has an obvious impact on those media companies who are trying to move their position in the value chain by 'taking a cut' on purchases - rather than charging for ad impressions or clicks.

But its greatest impact is in the way this must absolutely destroy the value of accruing (any old) eyeballs that mass media has delivered and ad buyers have fallen over themselves to buy.

Huge ad impressions, giant page impressions, masses of unique users - they all impress the advertiser who can't measure how many will buy his product when he places his ad.

The cost-per-click model gave that a severe kicking.

The cost-per-action model (if it's per sale) kicks it into touch.

And so what is the value of mass media in this world? What is it for?

Mass (produced) media is well and truly over, mass micro media may have a chance (focused on communities with shared interests).

Now that those communities have no (cost) barriers to entry they can organise, produce and share their own media. 'Media' companies must understand their new place in this world.

Your comments, are very welcome.

The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?